Frequently Asked Questions
Contributions
When do contributions by my employer vest?
Immediately. All contributions to the plan—those made by your employer or by you—vest immediately. This means they are credited instantly to your own account.
Do all contributions (employer/employee/voluntary) go into the same account?
Yes. You have your own personal account inside the plan where all funds received on your behalf, and the accumulated investment returns on those funds, are held. It's similar to a bank account; however, your pension account could contain up to three different sub-accounts (employer/employee/voluntary).
Every pension account will have employer contributions. If your collective agreement requires you to contribute to the plan, your second account would contain employee contributions. Finally, if your collective agreement allows for it, the third sub-account would hold your voluntary contributions. The sum of the dollar amounts in each of these sub-accounts, consisting of contributions and accumulated investment returns, will equal the total in your pension account.
May I make voluntary contributions to the plan?
Yes. The plan accepts voluntary contributions provided:
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they are permitted under your collective agreement
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they are deducted from payroll at source and shown separately on your employer’s remittance sheet
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you have signed an authorization form, which is on file at the CLAC Pension Administration office
Voluntary contributions are locked-in until you stop working under a CLAC collective agreement.
What's the total amount I can contribute to retirement savings in a year?
The total tax-deductible amount you are allowed to contribute in a year for all of your retirement savings is 18 percent of earned income up to a maximum of $22,450 (2010).
Can I receive my pension funds in cash?
If you meet certain criteria, you may be able to take your pension funds in cash. These criteria differ according to each province’s pension legislation. Please contact the CLAC Pension Administration office for additional information.
Can I transfer other retirement funds into the plan?
Yes, provided all the proper documentation has been completed and the funds are transferred from one of the following plans:
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registered pension plan (RPP)
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locked-in retirement account (LIRA)
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registered retirement savings plan (RRSP)
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locked-in RRSP
Transfer options
Can I leave my money in the plan if I go to work elsewhere?
Yes, at no cost to you. You will continue to receive regular statements showing your account balance and the applicable investment returns. It is very important that you keep the CLAC Pension Administration office informed if you change your address to ensure that you receive all pertinent information about your account.
What are my options if I stop working under a CLAC collective agreement?
If you terminate employment before you have completed two years of membership in the plan, you are entitled to:
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leave your funds in the plan until you decide otherwise,
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withdraw your account balance in cash, or
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transfer your account balance to an RRSP.
If you terminate employment after completing two years of membership in the plan, you are entitled to:
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leave your funds in the plan until you decide otherwise,
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transfer your funds to another registered pension plan or to a locked-in retirement account, or
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withdraw your funds in cash (certain conditions apply (contact the CLAC Pension Administration office for details on this option).
The options listed above are only available when the plan is no longer receiving contributions on your behalf and all final contributions have been received by the plan and credited to your account.
May I leave my funds in the plan now and transfer them out in the future?
Yes. You may transfer your pension funds at any time, provided all money has been credited to your account and the appropriate documentation has been completed.
What should I know about a locked-in retirement account (LIRA) or a locked-in RRSP?
LIRAs and locked-in RRSPs are accounts created by funds transferred from a register pension plan. According to existing legislation, LIRAs and locked-in RRSPs are restricted from access until you reach retirement age. It is very important that these terms are not confused with fixed-term investments inside an RRSP, such as GICs with fixed-term (locked-in) interest rates.
At retirement, or at the very latest December 31 of the year in which you turn 71 years of age, the locked-in funds must be used to purchase a life annuity, a life income fund, or a locked-in retirement income fund.
Do I get a tax receipt if money is transferred from the plan?
No. Money is simply transferred from one registered retirement vehicle to another one and therefore no tax receipts are required.
Retirement
When is the earliest I can retire?
Currently, normal retirement age is 65 and early retirement age is 55. You may gain access to your CLAC Pension Plan funds any time after reaching the age of 55 provided you are no longer a contributing plan member.
What options do I have with my pension funds when I am no longer a contributing member and have reached retirement age?
Up to and including the year in which you reach the age of 71, you may choose one or more of the following options:
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leave your funds in the plan
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transfer your funds to:
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another registered pension plan (RPP),
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a locked-in retirement account (LIRA) ,
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a locked-in retirement income fund (LRIF) (only available in some provinces)
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life income funds (LIF)
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use your funds to purchase a life annuity
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withdraw your funds in cash or transfer your funds to an RRSP (certain conditions apply)
On or before December 31 of the year in which you reach age 71, you must use the funds in your account to purchase a life annuity or transfer them into an LRIF or LIF.
How much can I expect to receive when I retire?
The amount of your pension depends on your age, the accumulated value of all contributions in your account plus the accumulated investment returns, and financial market conditions at the time you retire. An earlier retirement date means a lower monthly pension for you because your pension must be paid over a longer period of time. Alternately, a later retirement date means a higher monthly pension.
What are the major differences between a life annuity, an LRIF, and an LIF?
A life annuity provides a regular stream of income for as long as you live. A locked-in retirement income fund or a life income fund (LIF) performs the same function but allows greater flexibility in determining the monthly amount of income within a range of minimum and maximum limits that the Canada Revenue Agency sets. These options do, however, require continual monitoring and direction of investments. For more details on the advantages/disadvantages of a life annuity, LRIF, and LIF, please contact the CLAC Pension Administration office.
Income tax implications
Are employer contributions taxable?
All pension contributions made by your employer on your behalf are non-taxable. Your pension dollars are only taxed when and as you access them, usually in retirement.
Do I require an annual receipt from the plan for income tax reporting?
No. All pension contributions should be recorded on your T4 slip. Furthermore, the employer’s pension plan contributions should not be treated as a taxable benefit and therefore should not be included in your gross wages.
How should my pension contributions be recorded on my annual T4 slip?
Your employer should report contributions made by you in Box 20 (Registered Pension Plan Contributions) of your T4 slip. If you and your employer both contribute, the total of all contributions should be reported in Box 52, Pension Adjustment (PA). An individual’s PA in a year affects the limit he or she can contribute to an RRSP in the following year.
Miscellaneous
Should I name a beneficiary for my funds?
Absolutely! This is very important. Naming a beneficiary ensures that, in the event of your death, your pension benefits will be distributed according to your wishes. You can save your loved ones unnecessary expense and frustration by designating a beneficiary. Beneficiary cards are available from your union steward, union representative, or the CLAC Pension Administration office.
You may name anyone as your beneficiary; however, the law in certain provinces requires you to name your spouse (as defined by the Pension Benefits Act), unless a waiver is signed by both of you.
It is advisable to tell your family members that you are a member of the CLAC Pension Plan so they will know to contact the CLAC Pension Administration office in the event of your death.
How aggressively or conservatively are the plan's assets invested?
The plan’s board of trustees has developed a statement of investment policies and procedures (SIPP) that includes guidelines for conservatively investing the plan’s assets, along with other policies and procedures for management of the plan. This document is reviewed at each board meeting. The plan's professional investment managers must invest their portfolios in accordance with this document. The plan’s current asset mix, as outlined in the SIPP, is as follows:
The Plan’s assets will be diversified into the following groups. Their respective allowable ranges of percentage of portfolio value are included in brackets.
In a year of low returns, is money borrowed from my account to pay for those who are retiring now?
No. All plan members share equally in the investment returns of the plan. The money in your account is completely your own and can never be distributed from one plan member's account to another.
What is unitization?
Each month, the plan receives contributions on your behalf from your employer. This money is used to purchase units (like shares) for your account, and the newly purchased units are added to your existing unit balance. Each month, the value of a unit fluctuates with the market value of the plan's investments, which, in turn, affects your account balance. Some months show an increase in the unit value and others show a decrease. These fluctuations are normal and are reported on the reverse side of your account statement. They are also regularly updated on this site.
What are the operating costs of the plan?
The plan incurs administrative, investment, and regulatory costs in the normal course of operations. The size of the plan enables it to invest at institutional rates rather than at higher retail rates. By taking advantage of economies of scale, the plan has been able to keep its operating cost to 1 percent of total assets. This is well below the average management expense ratio that a normal retail mutual fund will charge, which generally ranges anywhere from 1.5 to 3.5 percent of total assets annually.